Bitcoin on Friday added 7 percent gains to its prevailing near-term upside momentum as it broke through its interim bias conflict.
The BTC/USD kickstarted the day backed by a strong but unusual uptrend from the previous day, which saw a $275-jump within a matter of 1-2 hours. The beginning of today’s Asian session simply saw the pair maintaining the bullish bias, while trending sideways. The price action showed that some traders were expecting BTC/USD to attempt a breakout above the triangle resistance. The pair formed its weekly high towards 6833-fiat, which also turned out to be the level of reversal. Longs got closed and the price fell towards 6593-fiat.
As of now, BTC/USD is trending inside a near-term ascending parallel channel whose next breakout level lies around 6900-fiat. The pair could form an intrarange action here, meaning a fall towards range support could allow traders to enter long positions towards, to begin with, 6600-fiat as the potential upside target for small profit squeezers, while sighting the channel resistance for a primary close. In another scenario, BTC/USD could also do a breakdown action, invalidating channel support to the downside and form lower lows towards 6400-fiat.
The RSI and Stochastic both lately headed inside their strong buying areas. But now, they are in process of reversal, again testifying a pullback extension towards the parallel range support in green.
Bulls are also attempting to keep BTC/USD above its 200H MA (look at the candles flirting with the red curve). An interim breakout should only be confirmed if 100H MA in blue will cross above the 200H MA. The interim bias conflict from yesterday has improved, but the sentiment has shifted to medium-term now.
Nevertheless, we are bullish near-term, as long as we maintain the 6600-support.
The range we are watching for today is defined by 6550-fiat as our interim support and 6600-fiat as our interim resistance. We are already above resistance, but an extended pullback action looks imminent at this point in time. That said, rather than getting chopped on overconfident long positions, especially after a speculative near-term rally, we will be focusing more on finding the new support to pursue a stable uptrend towards the giant descending trendline above.
So, we are first waiting for BTC/USD to come out of an uncertain 6600-area. A break below the rising trendline depicted in black would allow us to enter a short towards 6464-fiat as our immediate downside target. A stop loss order somewhere five-pips above will define our risk management strategy.
In case the price reverses from the ascending trendline, we will enter a long position towards 6675-fiat while keeping our stops four-pips below the entry level to secure our gains.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 5:20 PM